Earnings Call: Q1 2021

Apr 28, 2021

Among retail customers is contributing to strong growth with a significant high percentage growth in retail savings, 33% increased year by year and a 40% growth in P and sea and individual life, where onboarding on the intra portfolio is moving faster than planned, and we have already transferred close to €500,000,000 in annual portfolio premiums by the Q1. The strong growth in and digital activity demonstrates our position as a digital front runner. Regarding individual pension account. Storebrand experienced strong interest from our customers, but low numbers in actual movement in pension accounts in the market. We have, however, seen increased activity on our digital platform from the introduction of our individual pension account that has contributed to increased retail sales. It is very satisfactory to see that Storebrand Asset Management is the fastest growing Nordic asset manager in 2020 with a 15.17% growth. The growth is driven by positive net flow from new sales as well as market returns. We are especially pleased with the strong demand for our private equity solutions from Kubera and or a new partnership with infrastructure investments. As presented in 2020, a new growth area for Storebrand is public sector occupational pension, where Storebrand won its first mandates in 2020, transferred into the balance in the Q1 of 2021. This has resulted in a large net increase in defined benefit reserves in the Norwegian business of SEK 7,500,000,000 in the quarter. Moving to the announcement this morning of the sales of Verdaasbrucke. Storbrand has conducted a strategic review of its ownership of as Vadasbrucke and has entered into an agreement to sell 100 percent of the shares in AS Verasbrucke to Fabrizio's Groupen IS, fully owned by Eelsden. AS Verasbrucke is the 2nd largest private landowner in Norway, located in Ternlag County. The main activity are forestry, sawmill and limestone extraction. Store brand has owned ASVARASBRUKE since 1935, and we are pleased to have found a new owner who wants to preserve and further develop the business in a good and sustainable way. The transaction is estimated to have a positive impact of approximately €500,000,000 on Storebrand's group result in the Q2 2021 and add 2 percentage points to Storebrand's group's solvency ratio also in the 2nd quarter. Completion of the transaction is expected to take place ultimately May 2020. And with that, I give the word to our CFO, Lars Thank you, Darel. Good morning, everyone. The Q1 2021 was a satisfactory quarter with NOK 870,000,000 in group profit SEK671,000,000 in operating profit. Revenues were up and costs under control. Insurance results, we're generally on the weak side. More details on that in a moment. Due to a higher tax charge in the quarter, earnings sorry, with the increased interest rate level in the quarter, we are now entirely out of the transitional solvency capital, and the underlying solvency is up by 10 percentage points to 176%. Due to a higher tax charge in the quarter, earnings per share after tax adjusted for amortization is on the weak side. I will revert to this. Despite the significant rise in interest rates, we have been able to maintain most of our most of the customer buffers in Norway and actually increase them in Sweden. This is due to good returns, the asset liability match in Sweden and a large portfolio of bonds at amortized cost in Norway. The solvency of Storebrand is now without transitional capital. The solvency has strengthened by 10 percentage points to 6% in the quarter, primarily resulting from higher long term interest rates. This is somewhat below endless expectations, which may be attributed to a negative impact from symmetric equity stress and other regulatory changes. Furthermore, strong business growth in the public sector and the bank dilutes the solvency position initially, but is solvency or is positive to solvency generation over time. The regulatory solvency is down by 2 percentage points as we no longer benefit from transitional capital. The underlying solvency is up 10 percentage points to 176%. The sensitivities show strong resilience to further market development. The solvency position is more robust as the UFR is lower and the equity stress is higher. It means that it's easier to invest at the solvency discount curve and that a potential fall in the equity markets will be neutralized by a lower equity stress factor. Fee and administration income is up 9%, adjusted for currency movements. The insurance result is significantly better than last year, but negatively impacted by seasonal swings and some one offs. Costs remain under control despite growth related to the acquisition of the Inshore portfolio and acceleration in digital investments as communicated on our Capital Markets Day in December last year. The most noteworthy item on this table is the non payable tax charge of 41%. We have currency hedged part of the investment in our Swedish operation. Accounting wise, value of our investment in SPP will fluctuate with the Swedish kronor, Norwegian kronor currency cross. This does not have tax implications. The currency hedge, however, is a taxable financial instrument. In the Q1 last year, we got a tax income from a stronger Swedish kronor. In the Q1 this year, we saw the opposite effect. Furthermore, under IFRS, we have to account for a tax liability on Swedish real estate investments, despite the fact that this will never lead to any actual taxes being paid by SPP. This has a negative effect of SEK 44,000,000 in the quarter, but it will have limited effect from here on. The underlying normalized tax rate for the Storebrand Group remains at 19% to 22%. In the lower table of on this slide, we find the same group figures as on the previous page broken into our 3 result segments: savings, insurance and guaranteed. Savings show strong growth. Insurance is significantly up from last year, but below our ambitions and market expectations. Guaranteed shows a good quarter after strong financial results from the Swedish operation. Other contains the operating cost in the holding company as well as company portfolios and debt expenses. Continued strong growth and good cost control drives improving operating profit in savings. The weak financial result in the Q1 of 2020 was related to the market turmoil caused by COVID-nineteen. Financial result this quarter is slightly above expectations. All underlying business areas show significant improvements from last year. Unit Linked Sweden includes a special income element of NOK 36,000,000. The result in asset management has been reduced by SEK 26,000,000 in performance related expenses due to good relative performance in many of our active funds. Earned but not booked income amount to NOK 73,000,000 and will be booked in the Q4. The fixed result, I. E, the result without performance related income or expenses, is €181,000,000 the strongest on record. This picture illustrates continued good premium growth, a 33% growth in reserves and unit linked as well as 19% growth in asset management. A combination of strong sales, structural growth and good market returns drive the growth. If it had not been for the stronger Norwegian kroner in the quarter, assets under management would have passed €1,000,000,000,000. The bank once again is once again growing after a period with flat development. The margin is satisfactory given the low interest rate environment. The insurance area also shows good growth in premium income. Operational cost is up primarily as a consequence of the acquisition of the Insure portfolio last year. Claims are negatively affected by a sorry, a negative prioritization effect in SPP of SEK 28,000,000. In P and C, we traditionally have larger seasonal claims in the winter, which is also reflected in the results this year. Furthermore, the weak employment market continues to reduce reactivation, I. E, it's more difficult for people on long term sick leave to find a way back into the workforce. The latter situation is an industry wide problem and is expected to or a nationwide problem and is expected to continue for at least the next quarter. We expect a return to normal reactivation levels when the pandemic, hopefully, is under control in the second half of the year. The result in P and C and individual life is strongly up from last year. Health and group life is weak due to disability and low reactivation, while the pension related disability insurance in Nordic is hurt by both the periodization issue and lack of reactivation mentioned above. The COVID-nineteen related reserve strengthening we made in the Q1 last year remains untouched and creates a cushion for long term health effects from the pandemic as well as potential permanent changes in disability claims patterns. Here we see that the combined ratio ended at 98%, above the targeted 90% to 92% following the issues commented on the previous page. There is strong growth in P&C Insurance and Individual Life with 40% growth in portfolio premiums. This is partly explained by the takeover of the Insure portfolio, but also successful development in our partnerships. We are ahead of the business case for the takeover of the Inshore portfolio, and we are now targeting around SEK 700,000,000 in new premiums to be moved to Storebrand by the summer. The inshore portfolio is onboarded on satisfactory tariffs, and we see no adverse claims development. Guaranteed shows satisfactory development in operating profit and strong profit sharing from the Swedish operation. Defined benefit in Norway is weak due to risk results impacted by higher disability claims and low reactivation. Guaranteed Products Sweden showed good results after realizing high financial returns in the quarter, and particularly related to a sale of a property that generated a nice book profit. The small reduction in reserves in this picture is a result of 2 major elements. First, we have taken on around or SEK 7,500,000,000 in public sector assets after winning several public sector customers as of January 1. This is good growth. The other major factor is a weaker Swedish kroner, reducing the value of the Swedish kroner assets as measured in Norwegian kroner. The third element worth to notice is that Eurobend has been reclassified from a subsidiary under other to guaranteed products in Sweden. The reserves of Eurobend are around SEK 10,000,000,000 and profitable and with low risk to shareholders. Due to higher interest rates in the quarter, in the form of market value adjustment reserves and excess value of bonds at amortized cost has gone down. At the same time, we have managed to build reserves in additional statutory reserves and conditional bonuses in Sweden. The healthy buffers we had coming into the year reduced the negative results the result effect of higher rates in line with the strategy and the risk management policy. The higher rates have been used to extend the maturity profile of our bond portfolios to reduce interest rate risk and manage reinvestment risk. The balance sheet is stronger than ever and guaranteed reserves as a percentage of total pension reserves continue to fall. After the closure of Benco and the transfer of Eurobend to SPP, what remains in the other segment are the company portfolios of around SEK 32,000,000,000 and the holding company senior debt and life company sub debt of about SEK 11,000,000,000 in total. The financial result is negatively impacted this quarter by €35,000,000 due to repurchase of €50,000,000 of subordinated bonds, which will reduce the interest rate expenses going forward. One subsidiary remains in these figures, and that is Veralsburg. I can already now guide you on extremely good results under this segment in the second quarter. To sum it all up, the Q1 of 2021 is a quarter that demonstrates continued strong growth in our core in our strategic core, strong financial risk management that supports both superior returns to our clients and resilience to volatility in financial markets and a strong balance sheet. And with that, I give the word back to you, Daniel. Thank you, Lars, and thank you, Odaril. With that, we will open up for Q and A, and I give the word to the conference call operator. So the first one was on solvency. I was wondering, could you just give us an idea of how far you currently are from transitionals Kicking in, I mean, maybe how far interest rates would have for you, you did get transitionals back or something like that, very helpful. Second one was on today's divestment. I'm wondering if there are any other similar assets you've got that might potentially be be looked at for strategic review in the future and also whether there's any tax implications either from today's sale or any sort of possible future sales? On Ensure, you said it was going faster than planned. I'm just wondering, are you able to update us at this stage on what premiums you sort of expect to ultimately receive from it? And maybe if I can very, very cheeky and squeeze in a 4th one. Just on what you're saying last, just now your explanation of the sort of weak employment market and low reactivation rates impacting the results. I just that comment seemed quite Similar to the reasons that you gave last year for the reserve strengthening. So I'm just struggling to reconcile the comment that the reserve increase is a sufficient, But they're still dragging on the results. I probably missed something and there's probably slightly different effects. But if you could explain that, that would be very helpful. Thank you very much. Peter, unfortunately, the first part of your question disappeared in some technical issues on But I heard the last question, and I will try to reply to that, and then you unfortunately have to repeat the first question. But on reactivation, it's correct that the explanation of weak disability results in the 3rd, Q4 last year as well in the Q1 this year is similar, I. E, as long as the situation continuous with a weak employment market as a consequence of the pandemic and a lot of Norway and Oslo in particular is basically all closed currently, we will expect weaker reactivation levels. However, the reserves that we set aside in the Q1 last year were for the long term effects of long term health effects of COVID-nineteen, I. E, like people will have long term sick effects, not just temporary sick effects. And furthermore, that there will be changes in the long term disability claims patterns in society. So we set aside extra reserves for the long term effects of COVID-nineteen, but the fact that we have lower reactivation on a temporary basis as long as the pandemic lasts is something that we are taking on in the results every quarter. Perfect. The other questions I asked were, firstly, on solvency, how far you are from the transitionals kicking in? The second one was on today's divestment that you announced. And I'm wondering whether you've got any other similar assets, which you could potentially sell and also whether there's any tax implications either from today's sale or possibly any future ones? And the third one was on Ensure. You said it was going faster than planned. I was wondering if you now had a view on sort of what the ultimate amount of premiums that you might in that business, please? Thank you very much. Okay. If we start with how long how far we are away from transitionals, I think you can see that on Page 10 in the analyst presentation that if interest rates were to fall by 50 basis points, we would get about 11 percentage points of transitional capital back into the regulatory solvency. And so I guess that's the best answer I can give, not exactly in terms of basis points because it will depend on the whole curve and a couple of other factors. When it comes to Warrzeberg, unfortunately, I cannot say that we have a lot of these type of assets. It's been a long history with Warburg and it's been owned by store brands since 1935. And we have, of course, followed that investment very closely. And I think now is the right time to sell it and give it to a new owner. And this is I see it as a very good sale from Storebrand, a SEK 500,000,000 in result and a 2% point in increase in solvency that will come into place in the Q2. But you should not expect us to have more of these type of assets. And on the tax side, there's no tax implication from the sale. It's tax exempt under Norwegian tax and on the total insurance no insurer takeover, as I mentioned, we expect to takeover most of the portfolio by the summer, and it will probably end up in excess of SEK 700,000,000 in portfolio premiums. Great. Thank you very much. The next questions come from Ashik Musaddi from JPMorgan. Please go ahead. Your line is now open. Thank you and good morning, Lars, and good morning, Odo. Just a few questions I have is, First of all, how do we think about the solvency ratio hurdle of 180% given that you have raised solvency debt into this quarter? Does this mean that that debt will be part of that 1 80% hurdle going forward as well? Because in past you mentioned that you don't want to return extra capital, which is supported by debt issuance. So That's my first question. The second question would be, can you just give some more thoughts about the movement in solvency ratio in the quarter because it was lower than expected and it was largely driven by this equity stress and model adjustment, etcetera. Can you give a bit more color on that as to why was it very different from the sensitivity that had been provided? So just so as to understand like and we don't get it wrong in the future. So that would be the second question. The third one would be Any thoughts on this individual pension account, which has been introduced this year? I mean, how should we think about margin development going forward? Shall we be expecting like 1 basis point decline a year in terms of revenue margin or 2 basis points? Or any color on that The reason why I'm trying to get a bit more color is given that you would have already seen some impact in Q1. So any thoughts around the annual view would be great. Thank you. If I start on the solvency ratio, I think what we have that there should not be a material impact from transitional rules when we look at 180%. The debt refinancing and debt subordinated debt is absolutely full part of our solvency ratio and there's no conditions around that. We have a strong solvency ratio of 176 percent now. And we, of course, aim to be in position, as we have talked about, to start share buybacks, hopefully in 2022. I should say that the subordinated debt that we have issued now is part of the capital management framework, and it does not there is no deduction in terms of solvency level for share buybacks. So it's part of and appropriate and good capital management structure of the group and absolutely no negative effect, quite the opposite on the ability to Your share buybacks and regular dividends. Yes. Thank you. In terms of the movement, there will always be some model and assumption changes relating to the changes in the business. And it's difficult to predict exactly what they're going to be beforehand because as soon as we building into the model or the business changes, it will lead to model and assumption changes. And in this quarter, they amount to approximately 2 percentage point negative. On the regulatory changes, there's a small uplift from VA, but the UFR is lower. The fact that the UFR is lower hits the solvency approximately 3 percentage points. But it must be also said or repeated that with a lower UFR, it's easier to reach financial return above the discount rate in the solvency model, which means that we will create more solvency capital over time. And thirdly, the equity stress was up quite strongly this quarter and partly because of the way it's structured that based on European So European Equity Markets did well this quarter. That means that the equity stress goes up more than will be indicated by world economic world equity markets, where we have a we are more invested towards a MSCI world basket, whilst equity stress symmetric equity stress in the under EIOPA is more based on the European markets. So I think that probably explains most of the that's about 5 percentage points in terms of negative impact. I just want to stress that I really feel that the movement in the solvency in the quarter is strong and the negative effect is actually also on the long term, very positive for us because the equity stress now reaches the level where it's not going to be increased much more. Reduced UFR means that the hurdle rate going forward is reduced and will create faster solvency generation. And on top of that, the very strong business growth is, as we have shown, with very high double digit return on equity. It's very profitable. But of course, at 180% solvency level. It will have some watering out the solvency ratio in itself, but it's the best way of creating value for the group long term. So I feel it's a strong set of solvency ratios and the negative elements is all for the good causes. We showed a picture on the Capital Markets Day indicating that the bank solvency is 110% to 120%, that the unit linked business is 140% to 160%. But that means that when you add more business in these areas and you blend it into 180% or 176 percent solvency, you get the dilution effect day 1. But as Rodol says, it does create more solvency creation going forward. It's profitable growth for Storebrand. And it over time will reduce our reduce the need to have 180% to in order to do share buybacks or special dividends, as indicated on the Capital Markets Day, that could go down in a few years' time. When it comes to the individual pension account. As I said in my presentation, there has been limited transfers in the market altogether. But we will see gradually the capital certificates during the year be included in the individual pension account. And as we said on our Capital Markets Day, that will reduce as we see it the result element from defined contribution in Norway altogether with around SEK 100,000,000 in 2022. But there is a strong growth in the portfolio. And already in 2023, we expect to be at the same level in research generation from this portfolio as we see this year and last year. And of course, strong growth in combination with very strict cost control will lead to a situation with continued growth in this portfolio after the €100,000,000 dump in the road, so to say, in 2022. And the next question comes from Hakan Astrach from DNB Markets. Please go ahead. Your line is now open. Hi, good morning. Two questions from me. The first question on insurance. And if you understand you correctly that You think it will be difficult to reach your combined ratio target of 90% to 92% in 2021, And given the headwinds that you expect on disability? That was the first question. No, we still aim to reach 90% to 92% in combined for the full year. And as you saw last year as well, we had a bad first quarter, but then we had a couple of quarters in the mid-80s. So we made up for the shortfall in the Q1. Should also add that, of course, the strong growth in the portfolios now comes in with add cost initially. But during the year, we will have much more income from the portfolios. And then we also will have a better research generations, especially on the individual lines in P&C during the year. We're also constantly monitoring the profitability in the different product lines and making adjustments where needed. Perfect. That was very clear. And the second A bit more high level one, and that is on the bank. So how do you see the position of Stuttigram Bank going forward given a Potential merger merger, sorry, between S Bank and D and D. Hope it's not a merger. But no, of course, this Espanken has been a digital foreigner in the banking market in Norway. It's highest customer satisfaction in the market. I think an acquisition of of Sbanking of from DNB open up the space for other digital base banks as Stordbrand Bank. And of course, we are very eager to take our unfair share of the growth in the banking market to expand our retail position that are in very strong growth as we see from the numbers this quarter. And we look very forward to meet that opportunity. And you see that the growth in this quarter of 4% points, more than SEK 2,000,000,000 in growth of the loan portfolio. That is a good start to all the continuing growth and development of Stobrand Bank. Thank you. And just to follow-up, so I'll just see a potential of the different strategic options for Storebrand Bank, yes, going forward? What do you mean with strategic options? Yes, meaning that In the past, you have talked about that you say that you could, for instance, go into partnership with Banks or etcetera? Or do you still feel that Stordband Bank works best on itself? We, of course, always follow the market very closely. But we feel that having the bank operation together with the insurance operations and the savings setup in our retail business that gives us the opportunity to have the best solutions 4 different groups of customers, adding these types of products together in good value propositions for our customers and having a fully owned bank that doesn't need to be the largest bank in the market, but needs to be a good bank solutions, especially on the savings side, together with our savings strategy, that is important. So we are very happy with Storebrand Bank and are happy to grow it organically from the point we are today. Thank you very much. The next question comes from Ulrik Tuccher from Nordea. Please go ahead. Your line is now open. Thank you and congratulations with a fantastic inflow momentum. Really happy to see that. But it was Two questions. The first one is you had a negative unit linked transfer balance in Sweden 2 quarters in a row now, and that's It's been years since you had that. Is there anything specifically going on in that market we should Be aware of or why have you been losing some business there? 2nd question, I was just wondering if It would be possible to be a bit more specific on the P and C claims ratio. That was up, I think, 14 percentage point Q on Q. Like was this driven by the cold winter in Norway or product mix given your new business? Or yes, what was the driver there? Thank you. So on the negative unit linked balance in Sweden, we see especially one competitor that offers quite high compensation for transfers in the Swedish market. So we've seen some more some transfers to one competitor in particular due to high compensation from them. That's a very costly growth strategy, and we've implemented measures to counter that, and we continue to have high ambitions for positive transfer balance over time in Sweden. On P and C claims in addition to normal seasonality swings in the winter. There was also runoff loss for Motor in the quarter of NOK 15,000,000, which is yes, we're having so that was more negative than we've seen in the past. Hopefully, that was a one off runoff loss. Great. Thanks a lot. The next question comes from Blair Stewart from Bank of America. I've only got a couple of small questions left. Firstly, in the DB fee segment. I just wonder why the fee income wasn't any higher on a quarter on quarter basis given that you've taken in The transfer balance from the public sector, was it just simply too early to see any benefit of that? Or is there something else going on? Secondly, the loss of the group life contract, which was about €275,000,000 in premiums. I just wonder if you can talk a little And what the if any P and L effect of that is, I'm assuming because it's left you that it wasn't very profitable, but perhaps not. And finally, just on the pension related disability line. I think you took a 28,000,000 hit from Sweden. Was that just an error in the previous quarter that had to be rectified? Or was it Something else. Thank you. Good questions, Blair. On the DB fee income, we The old DB portfolio is in runoff, so that goes down with premiums going down as well. But then we have the public sector funds that came into this portfolio the way we book it in the quarter. And unfortunately, not all of the income relating from that portfolio has been fully recognized in the quarter simply due to the fact that we're taking on board this currently and some of the income fee income related to that will be booked in the Q2. So that's only like the takeover procedure has a delay in the fee income recognition. So your question is accurate and well spotted. On the group life loss of this one particular client. The reason why we lost it is because we priced it in a way that should provide profits, and it has not been very profitable for us. So losing an unprofitable client is acceptable, and it does lead to lower premiums. So we do have to adjust somewhat on the cost side, but very limited. So it should not have any significant P and L nor balance sheet impacts in the short to medium or at all. On the SEK 28,000,000 in Sweden, we were on disability or sick leave claims in Sweden. We booked 28,000,000 too much or positive result, which was SEK 28,000,000 higher than it should have been due to a technical error during last year. That has been reversed now. It was still very profitable with disability insurance in Sweden last year, but SEK 28,000,000 less profitable than what can be seen from the accounts of last year. That has now been rectified, and we do expect continued positive results from this business line in Sweden going forward. Great. Thanks very much. We have a question from Weigar Tuverud from Pareto Securities. Please go ahead. Your line is now open. Thank you. I have three questions. First on Madoff Brooker. Could you disclose the sale price or confirm that you have booked it at around SEK 60,000,000 in your account? We can confirm that the sales price was a little bit higher than 800, and that means that the booked the booking in our account was a little bit less than SEK 300,000,000. But the reason why you asked about SEK 60,000,000 is probably because it's been booked partly in Storebrand ASA and partly in Storebrand Life. Yes. So as far as I could tell this morning, it was a little lower, but we could follow-up to that maybe on e mail later on. On the transfer market, it seems also that the net transfers on DC in Norway are Quite negative compared to what it used to be. Is there any change in the competitive environment? And who are you losing premiums to here? It was very tough competition last year on defined contribution contracts in the Norwegian market ahead of, I guess, a positioning ahead of the IPA, the individual pension account market. No, sorry, the yes, the own pension account market. So we did lose some contracts in the 4th quarter that were booked in the transfer balance now. Is it possible to say where these premiums are going to which competitor? Well, it went to different competitors, but I don't know. Now I think it was a lot of different mandates and tender offering from all the different competitors last year. And we won some and we lost some. And it's, of course, all the still the large players in the market that they both had some losses and some gains on that with DNB and Nordea maybe as the largest competitors to us in this market. Okay. Thank you. And then lastly, as you expect also lower reactivation next quarter, is that already in account. So have you provisioned for it now? Or should we expect also lower result for the next quarter? No, I would expect reactivation to be low until the employment market normalizes somewhat. And as long as Norway is closed, we expect lower reactivation and lower disability results in the Q2. But as I mentioned, when the whole service industry and those kind of industries open up again, hotels, traveling, restaurants and cafes and bars. Hopefully, that will open up sometime during the summer or at least in the Q3. And that should pull away a lot of that lack of reactivation that we've seen in the last few quarters. So we try to reserve for the long term effects, but the short term implication on reactivation has not been reserved for it. So it leads to an expected weak result, but not losses. Okay. And could you then just Can you give some details on which lines will this hit the group life and the DC related pension in insurance and also sum in the guaranteed segments? Well, that's what we've seen historically that we've had both in the some of the group life contracts in the DB contracts as well as the disability in Norway linked to defined contribution contracts. Thank you very much. That was very clear. The next questions I have 3 more questions, please. The first one was Swedish unit linked. The fee margin was very high this quarter, 89 basis points. I'm just wondering if there's anything sort of particular that was driving that. And I mean, I guess, given your comments about needing to be a bit more competitive, Might that put a bit of pressure on that going forward? Or how should we think about that? It would be great. The second one, I mean, also in Sweden, you posted a very strong Consolidation ratio at 111%. I mean, I guess that just means that The income you already talked about should be more secure without meaning you can go up to the next level. But any comments You can make on that would be very helpful. Does it give you any sort of more flexibility? Or what does that mean for you? And the third one, just on the asset management net flows, very strong across the group. Would you be able to split those into sort of Storebrand and Skagen? And any thoughts on the outlook there, sort of pipeline you're Seeing how that might develop would be very helpful. Thank you very much. Okay. On the Swedish unit linked margin, you're right, it was 89%, but it Includes a one off transaction fee of SEK 36,000,000. So adjusted for that, it's SEK 0.78, and that's It's in line with the slow decline in the margin in Swedish Unit Link over time. And so if you make that adjustment, you will see a normalized development. On consolidation of 111%, you're correct. It ensures that we will get the consolidation the indexation fee going forward. It was booked with SEK 37,000,000 in this quarter, and it includes one more small portfolio in addition to the one that you have in your spreadsheet. So you should expect that to be slightly higher than it has been in the past. But you correct the next level before we get a significant jump in further indexation fee is at approximately 120%. So that's much higher up. So it ensures that we will get the taxation fee and it's slightly more than it has been. When it comes to the flow in asset management, as you it's a very strong flow numbers altogether. And of course, on the Storebrand side, an example with a SEK 7,500,000,000 in the public sector is a very positive flow in our captive asset management business. But the very strong growth also alternatives, especially Kubera on our real estate side. And we also now started doing very positive business with infrastructure. So these elements are the main drivers on the external side for the growth together with our, of course, our bread and butter business in asset management that goes to institutional players. When it comes to more active business like active funds like Skagen and also Delphi, we now see a very strong return. And that's also, as Lars said, we have very positive performance fees that is not booked, but we have to take, of course, the cost as on a quarterly basis. So we have a very positive outlook when it comes to our active mandates due to the strong relative and absolute performance we see in these mandates going forward. But the main drivers for the growth is, as you understand, the growth in store brand as it comes from our captive business, but also very much external business due to alternatives. We do have another one in the queue already, and that's from Thomas Schwenzen from SEB. Please go ahead. Your line is now open. Yes, good morning. Just a follow-up on the asset management flow there. So your long standing ESG profile, how Do you think that will benefit you for the next couple of years? Is it so that everybody is free now, so you will not get any extraordinary mandates As a result of your ESG profile. And secondly, on the public and since I, what is the potential or the pipeline for flow of funds from the public sector in the next couple of years? Thank you. Well, thank you. We feel that we are perfectly placed in the market with our ESG profile for our asset management. We've been performing this kind of asset management now in more than 25 years gives us a very strong position for ESG mandates. Sense. That is, of course, important for all our business, but we see that the Nordic growth and international growth in special is absolutely important with the ESG solutions we can offer to the market. It's a full very broad range of it from index funds that are very much ESG linked without high tracking errors to specialized funds very focused on ESG. So that is a very strong sales point together with the return in the portfolios and funds, of course, and especially in the international growth that we have a breakthrough when it comes to international mandates last year. We see this as a very important point going forward. When it comes to the public market, of course, that is divided into different parts, of course, public companies. That is an ongoing process, and we see large interest and flow into the business on an ongoing basis based on discussions for public companies. But the municipality market that has and opening in the end of the year. So that is autumn type power of business. So we are now working and are on dialogue with different municipalities. And it's too early to say how large this market will be at outcome of 2022, but there is positive 2021 and but there is positive discussions around these mandates. And the last question for today is from Jan Erik Kjelland from ABG Sundance Kjell. Please go ahead. Your line is now open. Yes. Good morning. Sorry if this has been asked before. But the DCC in Sweden, could you shed some more light into How it will work going forward? If you expect more contribution from taking back money from the VCC? Or how should we read your strong performance related earnings in Sweden? I can try, Jan Erik. Yes, I think in expectation given changes in rate levels and how we look now, we would expect somewhat higher recuperation of deferred capital contribution going forward than what you have seen when you look in the rearview mirror. So not SEK 100,000,000 every quarter, but sort of a contribution between SEK 100,000,000 to guide in the model, but what you do see is that the drag becomes less in the sensitivities, which we publish in the supplementary information, the drag from the low interest rate environment becomes lower each quarter, and that means that we will, on average have a little bit higher contribution from DCC each quarter. But I don't dare to give a number. It's a lot of moving parts, as you know. And of course, this quarter, very positive on the real estate side as a gain on that part. But of course, equity markets, credit spreads, how the alternatives is behaving on a quarterly basis have an impact on this, but having a lower UFR and a lower hurdle rate helps for getting more positive returns overall going forward. Perfect. Just back to the profit sharing and the indexations which is sort of 2 moving parts as well. We touched a little bit upon them and that indexation fees are here to stay, maybe a little bit higher, as you said. The profit sharing, how does that work when it comes to is that on top of the indexation? Or how should we read that Profit sharing in the different kind of models. Yes. So the profit sharing is in the portfolios with a profit sharing, which is not in the portfolio which has an indexation fee, it works in the way that if you have a return above the guaranteed rate, 90% goes to the policyholder and 10% goes to the shareholder. So you can still have profit sharing and indexation fee at the same time, but you need to have sufficient return in the so called EF portfolios in the Swedish business, while the indexation fees is in the defined benefit or the so called KF portfolios for those who follow us very closely. There is no further questions in the queue. So I will hand the call back to you. Thank you. With that, we have come to the end of this quarterly presentation. Thank you very much, everyone, for attending. We look forward to see you next quarter again. Have a nice day.